Scott Wright: Festive cheer has been ripped away from hospitality trade, but is government doing enough to help?

The industry, one of the country’s biggest employers and the heartbeat of social life in Scotland, is facing a ruinous festive season after the outbreak of Omicron and subsequent measures to halt its spread took a wrecking ball to its hopes.

Bookings quickly evaporated last week after first Public Health Scotland and then First Minister Nicola Sturgeon cautioned people to think twice about attending Christmas parties, denying operators desperately needed income and leaving them holding millions of pounds of stock that will not be used.

Suppliers to the trade such as wholesalers and others who work in wider hospitality ecosystem, including bands, entertainers and DJs, have been stung too, left once again with severely depleted income after such a desperate 21 months. It would take a heart of stone to not sympathise with the plight of everyone involved, especially given that it could be three months before the Omicron crisis passes.

Calls quickly ramped up for emergency government aid to mitigate the financial hit. And those demands were finally answered by the Scottish and Westminster governments on Tuesday. But will it be enough to soften this most savage of blows?

The Scottish Government announced a £100 million support package for what it described as “eligible businesses”. While the industry welcomed the commitment, the Scottish Licensed Trade Association warned that the support is “nowhere near” what is required, given that some businesses have seen up to 70 per cent of their festive bookings cancelled and with no end to the crisis in sight.

Indeed, an indication of what the sector has already lost was laid bare on Sunday evening by the Night Time Industries Association Scotland, which in a statement declared that more than £1 billion of additional economic damage had been inflicted on the sector in the week since Public Health Scotland urged people to avoid Christmas parties. And it predicted further damage will be done to the sector and its supply chain following the introduction of tighter restrictions this week, including new guidance that places a three-household cap on social gatherings. Hospitality businesses will also be expected to reintroduce measures to support social distancing in outlets, such as protective screens at till points.

It may be some consolation to the industry (and indeed to sectors such as retail) that it has already invested in the infrastructure that should mean complying with such measures will be possible without too much hassle. But this benefit pales into insignificance against the financial hit the new restrictions will bring. As some in the industry have observed, the situation facing hospitality now is even more difficult than it was this time last year, when the furlough scheme and government grants provided some financial respite.

With regard to financial aid, it was somewhat depressing to see the matter seemingly descend into an episode of political gamesmanship this week. Some observers believe the UK Government attempted to scupper Ms Sturgeon’s speech to the Scottish Parliament on Tuesday by issuing a press release declaring that Westminster would provide additional financial support just minutes before the First Minister stood up to speak, without saying how much. This came after Ms Sturgeon had apparently criticised the lack of support from Westminster.

In effect, the additional money from the Treasury will not be new, but an advance on what Scotland would be due next year under Barnett consequentials. While such arguments provide good fodder for political journalists, they are an unwelcome distraction for business owners that are in urgent need of emergency aid. If the Scottish Government cannot currently provide the support that is needed, then it is up to the UK Government to step in, the SLTA declared.

“Our industry desperately needs additional aid to save it – and it needs it now,” said managing director Colin Wilkinson. “I cannot stress [enough] how serious the situation is – many of our members are in dire straits.”

Steps must be taken by government to ensure businesses so badly affected by the new restrictions receive emergency funding quickly. The Federation of Small Businesses in Scotland expressed frustration during the last lockdown over the length of time it took local authorities to get the cash to those firms that were eligible for help.

Now, nearly two years into the pandemic, the need for financial aid to hit business bank accounts quickly is more urgent than ever. Any cash reserves firms had built up in the years before Covid will surely now be depleted, and many businesses will have had to take out loans to survive the downturn.

“Grant support for hospitality businesses, and their suppliers, is both a welcome and necessary step,” said Andrew McRae, FSB Scotland’s policy chairman, this week. “The money must reach firms as quickly as possible, especially since the new household mixing rules are bound to cause another surge in cancellations. The financial firepower to help firms during this stage of the crisis must be found.”

There is a further important dimension to the current crisis that should be noted. Business owners and their staff are once more being confronted with real uncertainty over the future of their livelihoods, a situation many will have already repeatedly faced since the pandemic began. Omicron has brought fresh strain to many people who have well and truly been through the mill, and who will need as much support as can be mustered to safeguard their health. The crisis may also lead to more talented people deciding the hospitality industry is no longer for them.

Industry bodies are not dismissing the risk to health from Omicron. All they want, and deserve, is the right amount of financial support to help them ride the latest wave of this crisis. The alternative really does not bear thinking about.